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Monday, October 3, 2022

Sugar export volume to drop by quarter on low stocks

India’s sugar exports are likely to decline to around 8 million tonne (MT) in the next season starting October, compared with record shipment of around 11.2 MT worth $4.6 billion in 2021-22.

The decline is attributed to lower carry forward stocks at the beginning of the season. Sugar prices in the global markets are firm at present and if the demand persists, export realisation may turn out to be high despite reduced volumes.

The decline in sugar exports would be despite the India Sugar Mills Association (Isma)’s estimate of production of 40 MT of sweetener in the 2022-23 crop season , against 39.4 MT in 2021-22 season.

Aditya Jhunjhunwala, president, Isma, said advance exports contracts would result in better cash flows and payment to farmers in the next season.

Sugar mills have urged the government to allow exports of 8 MT of the sweetener under the open general license (OGL) for the next season. This, according to the Isma, will help the sugar mills enter into future export contracts well in advance prior to commencement of the season.

Trade sources told FE that the opening balance of sugar in the beginning of October 1 since the last few years had been around 8 – 10 MT while opening sugar stocks this time around will be about 6 MT.

Of the total sugar production of 40 MT next season, around 4.5 MT is expected to be diverted to ethanol production while domestic consumption is estimated at 27.5 MT in the next season.

“It becomes imperative to export at least 8 MT of surplus sugar in order to maintain optimum sugar balance thereby avoiding fall in domestic prices,” Jhunjhuwala has stated in a recent communication to the food ministry.

However, the food ministry will take a call after assessing the supply situations in October or November about the nature of export permits under OGL or to continue with the existing quota system for sugar exports.

Due to adequate monsoon rainfall in Maharashtra and Karnataka, and irrigation facilities in Uttar Pradesh, the current sugarcane crop prospects are quite robust, an official said.

In May, the government had imposed restrictions on sugar exports from June 1, a move aimed at ensuring domestic availability and curbing price rise. However it allowed an additional sugar already export of 1.2 MT after 10 MT of sweetener was shipped.

Also read: $1 trillion exports: These 6 sectors to help India become export powerhouse by FY28

Sugar has been exported to countries including Nepal, Bangladesh, Sri Lanka, United Arab Emirates, Afghanistan, Indonesia and Somalia and others.

Sugar season is between October and September. The cane crushing season usually commences in October-November and continues until April. In sugar seasons 2017-18, 2018-19 and 2019-20, about 600,000 tonne, 3.8 MT and 5.9 MT, respectively, of the sweetener was exported. The exports stood at 7.1 MT in 2020-21.

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